Residency law gives the Spanish market a boost

New rules in Spain are likely to warm up the property market further.

For sale signs written in Russian are displayed on the window of an estate agency in Platja d'Aro, Spain. Russians are snapping up luxury villas, attracted by a new opportunity to acquire Spanish residencyPhoto: OSEP LAGO/AFP/Getty Images

Spanish property is set to become particularly attractive this summer, as a new law expected to come into force by July will allow non-EU residents to get Spanish residency automatically if they buy a property worth €500,000 or more.

Foreign investment in the Spanish property market has increased by 17pc in 2012, according to the latest figures from the Bank of Spain, taking it to a level not seen since 2004. The market has become increasingly attractive as a result of the significant falls seen in property prices since it was enveloped in the financial crisis.

Back in 2003, around €7 billion was invested during the Spanish property boom, but in 2009, just over half of this amount was invested, at €3.6 billion. Since then, however, the figures have improved, with €5.54 billion being spent last year.

An influx of investors from Asia-Pacific, China, Russia and America is likely to boost the Spanish property market, which could be good news for those British expats who have found themselves in properties that are worth significantly less than when they bought them.

The luxury real-estate agency Lucas Fox is already working with the Asian property consultancy SQFT, and they are expecting a delegation representing nine groups of Chinese and Korean investors to come to Barcelona by the end of May. They will be shown properties in Catalonia, Ibiza and the Balearics.

Han Bin, director of SQFT, said: "Most Chinese investors want to buy a property in Barcelona because not only are they getting a good investment, but there is now the opportunity to acquire Spanish residency at the same time. What's more, the market is particularly attractive given the historic low prices."

Jason Ham, business development manager of Lucas Fox, who is based in Ibiza, has been collaborating with SQFT since September.

He said: "We have seen Chinese investment in many corners of the world but this is the first time that we have seen interest in Ibiza. Thanks to the proposed changes in residency laws for property investors outside of the European Union, we expect to see increasingly more interest from the Asia-Pacific region, as well as Russia and the US."